Investor Presentation June - Microsoft · Investor Presentation High Complexity (Nelson Complexity of Reﬁnining Companies) 19 0 5 10 15 İ zmit Ref. o Reliance Essar Marathon Oil

Investor Presentation June 2018

Investor Presentation www.tupras.com.tr

Disclaimer

This presentation contains forward-looking statements that reflect the Company management’s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by a variety of variables and changes in underlying assumptions that could cause actual results to differ materially.

Neither Tüpraş nor any of its directors, managers or employees nor any other person shall have any liability whatsoever for any loss arising from use of this presentation.


Content

3

• Refining Market Slides 4-10

• Turkish Market Slides 11-15

• Company Overview Slides 16-25

• Operations Slides 26-31

• Key Financials Slides 32-42

• Outlook Slides 43-48

• Appendix Slides 49-56

REFINING MARKET


Brent Crude Oil Prices ($/bbl)

5

25

36

47

58

69

80

4.01

.201

6

1.02

.201

6

29.0

2.20

16

30.0

3.20

16

27.0

4.20

16

26.0

5.20

16

24.0

6.20

16

22.0

7.20

16

19.0

8.20

16

19.0

9.20

16

17.1

0.20

16

14.1

1.20

16

12.1

2.20

16

12.0

1.20

17

9.02

.201

7

9.03

.201

7

6.04

.201

7

4.05

.201

7

23.0

5.20

17

20.0

6.20

17

18.0

7.20

17

15.0

8.20

17

13.0

9.20

17

11.1

0.20

17

8.11

.201

7

6.12

.201

7

8.01

.201

8

5.02

.201

8

5.03

.201

8

4.04

.201

8

2.05

.201

8

30.0

5.20

18

CONS • Increase in number of rigs & production in US

• Concerns about future of OPEC & non OPEC production cuts

• Inventory Levels• High crude exports of OPEC

PROS • OPEC & non OPEC supply cut

• Political instabilities in Middle East

• Future of nuclear agreement

• Healthy PMI data in developing countries

• Expectation of high global GDP

26,0

76

REFINING INDUSTRY

Source : Platts As of May 30th


Refinery Capacity Change

6

-3000

-2000

-1000

0

1000

2000

3000

4000

China India Middle East Other Asia Other Japan North America Europe

200

160

343

200

33036

200

-91

46

244

-116

120

420

-268

105

-143

76

-220

156

70

-57

364

-130

40

150

417300

244

-189

63

-443

198510

270

-352

305

-140

390120

400

520

-546

-775-4,7

302

526530

-421

65

-240

18084

181250

160

-266-109-145

40135340

150334

-486-543-25552195160

640810

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

0,0

0,5

0,9

1,4

1,8

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

1,5

1,1

1,8

0,6

1,31,5

0,60,3

1,31

1,81,7

Thousand Barrels/Day

Source:, Reuters, International Energy Agency, Tüpraş, sector reports and news

Net Capacity Additions (mb/d)

REFINING INDUSTRY


Middle Distillate Cracks ($/bbl)

7

0

4

8

12

16

20

Jan Feb Mar Apr *May Jun July Aug Sep Oct Nov Dec

12,1 12,2 12,613,6

14,3

2015 2016 2017 2018

10,4

7,2

14,8

11,5

10,0

7,6

0

4

8

12

16

20


11,9

14,413,7

14,4 13,8

9,5

6,6

15,1

11,4

9,1

8,0

Diesel Jet Fuel

REFINING INDUSTRY



Gasoline and High Sulphur Fuel Oil Cracks ($/bbl)

8

-20

-17

-14

-10

-7

-4


-13,2

-11,9-12,7

-15,2

-13,1

0

6

12

18

24


10,2 10,612,0 12,1

13,0

2015 2016 2017 2018

10,4

18,6

9,8 9,7

11,9

15,7

Gasoline High Sulphur Fuel Oil

-8,7

-12,2

-10,2

-12,5

10,9

-16,7

REFINING INDUSTRY



Quarterly Product Crack Margins ($/bbl)

9

While diesel & jet cracks outperformed in Q1 2018 compared to a year ago, gasoline & fuel oil cracks declined significantly during the same time frame.

Gasoline

10

12

14

16

18

20

Q1 Q2 Q3 Q4

10,913,3

14,315,0

10,9

15,214,5

10,9

12,813,0

19,4 18,9

13,5

Diesel

6

8

10

12

14

16

Q1 Q2 Q3 Q4

12,3

10,5 10,7

13,112,4

7,99,2 8,9

11,2

15,7 15,2 14,6

10,8

2015 2016 2017 2018 Jet Fuel

6

8

10

12

14

16

Q1 Q2 Q3 Q4

13,3

9,5 9,9

12,4 12,0

7,3 7,7 8

10,2

14,4

11,210,5

9,4

High Sulphur Fuel Oil

-20

-16

-12

-8

-4

Q1 Q2 Q3 Q4

-12,6

-9,1-7,0 -6,9

-10,0

-13,2-15

-10,6-9,4-11,6 -12,1

-13,1-15,5

REFINING INDUSTRY


Crude Price Differentials ($/bbl)

10

Heavy Crude Price Differentials Ural Differentials

-4

-3

-2

-1

0

1

Jan Feb Mar Apr *May Jun Jul Aug Sep Oct Nov Dec

2012-2017 Min. 2015 2016 2017 2018

-0,6

-2,1-2,3 -2,4

-1,8

-10

-8

-6

-4

-2

0

11Q

111

Q2

11Q

311

Q4

12Q

112

Q2

12Q

312

Q4

13Q

113

Q2

13Q

313

Q4

14Q

114

Q2

14Q

314

Q4

15Q

115

Q2

15Q

315

Q4

16Q

116

Q2

16Q

316

Q4

17Q

117

Q2

17Q

317

Q4

18Q

1*1

8Q2

Iran Heavy Kirkuk Kuwait Basra Heavy Arab Heavy

-0,3

-1,2-1,3

-1,6

Brent Brent

REFINING INDUSTRY

*18Q2: April and May data

TURKISH MARKET


Turkish Economy Strengths

12

78

79

80

81

82

2016 2017 2018 2019 2020

828181

8079

Population (mn)

1.4% growth in last 5 yrs

0-40 yrs >65%

0

2,5

5

7,5

10

2010 2011 2012 2013 2014 2015 2016 2017

9,2 8,8

2,1

4,23,0

4,02,9

7,4

GDP (%)

21

22

23

24

25

26

27

2016 2017 2018 2019 2020

27,726,1

25,124,2

22,3

Diesel Consumption (mn ton)

8.8% average growth in last 5 yrs

4% annual growth

Car ownership per thousand people

0

55

110

165

220

2014 2015 2016 2017

127 134

176

213

2002-2014 4.9%2010-2014 5.4%

Source: EMRA, TSI

67%

REFINING INDUSTRY


Turkish Consumption (Milyon ton) 2015-2017

13

Diesel

-4%

Jet Fuel

2017

2016

2015

0 0 0 0 1

0,60

0,58

0,49

Fuel Oil*

2017

2016

2015

0 1 2 2 3

2,10

2,23

2,30

Gasoline

+6.5%-3.5%

2017

2016

2015

0 1 2 3 4 5

4,58

4,40

4,522017

2016

2015

10 14 17 21 24

20,56

22,31

24,17

+8.5%

+8.3%+2.7%

+3.1%-15.7%

Kaynak: EMRA*Bunker excluded.

REFINING INDUSTRY


Strong Turkish Market, 3M 2018 (Million tons)

14

Tüpraş is well positioned in a growing, short market. Diesel and jet fuel consumption in Turkey in the first 3 months of 2018 grew significantly driven by infrastructure projects, aviation growth and consumption of heavy duty vehicles.

*Bunker excluded Source: EMRA

2018

2017 0,83

0,97

Diesel

+17.3%

Jet Fuel

2018

2017 0,19

0,14

Fuel Oil*

2018

2017 0,48

0,52

Gasoline

+13.4%

+8.9% -25.3%

2018

2017

0 1 2 4 5 6

4,95

5,61

REFINING INDUSTRY


Turkey’s Import / Export Balance (Net) (Million Ton)

15

-16

-12

-8

-4

0

4

LPG Gasoline Diesel Fuel Oil Jet

0,30,7

-13,2

3,2

-3,1

0,01,0

-12,0

2,4

-3,1

2013 2014 2015 2016 2017

Source EMRA

Import

Export

REFINING INDUSTRY

COMPANY OVERVIEW


%83

%18

Tüpraş Shareholder Structure

17

%77

%79,98

%40 %49

%100

%20

%51

%3

Energy Investments Inc. (SPV)

Free Float

Publicly Traded

*Distribution of Domestic/ Foreign Ownership of Tüpraş Shares

*As of December 31th, 2017

Foreign Ownership

Domestic Ownership

COMPANY OVERVIEW


Tüpraş Refining Assets & Distribution Network

18

Turkey Storage Capacity

Tüpraş : 58%Opet : 9%Other Companies : 33%

İzmir

İzmit

Ankara

İstanbul

Kırıkkale

Batman

Kirkuk

Baku

Terminal Refinery

OPETGiresun Terminal

OPETMersin Terminal

OPETAntalya Terminal

OPETMarmara Terminal

19,392 m3 240,000 m3

721,000 m343,130 m3

Crude Pipeline

İzmit• 11.0 MT Capacity • NC: 14.5 • Storage Capacity: 3.03 mn m3

İzmir• 11.0 MT Capacity • NC: 7.66 • Storage Capacity:2.51 mn m3 • Base oil 400 k tons

Kırıkkale • 5.0 MT Capacity • NC: 6.32 • Storage Capacity: 1.41 mn m3

Batman• 1.1 MT Capacity • NC: 1.83 • Storage Capacity:0.25 mn m3

Total Capacity : 28.1 mn ton

Nelson Complexity : 9.5

Tüpraş Storage Cap. : 7.2 mn m3

OPET Storage Cap. : 1.1 mn m3

COMPANY OVERVIEW


High Complexity (Nelson Complexity of Refinining Companies)

19

0

5

10

15

İzm

it Re

f.

Vale

ro

Relia

nce

Essa

r

Mar

atho

n O

il

Hol

ly-F

ront

ier

Nes

te BP

Teso

ro

Thai

Oil

IOC

L

Tüpr

aş-2

015

Hel

leni

c

PKN

MO

L

SHEL

L

Petro

m

Gal

p

Sara

s

Petro

bras

Tüpr

aş

Luko

il

HPC

L

CPC

L

BCP

Esso

(Tha

i)

S-O

il

MRP

L

SK E

nerg

y

BPC

L

5,85,85,96,56,87,17,17,17,17,3

8,08,48,78,89,09,29,29,49,59,69,89,9

10,411,0

11,511,611,812,6

13,0

14,5 Tüpraş After RUP

Tüpraş Before RUP

İzmit After RUP14,5

9,5

7,3

COMPANY OVERVIEW


Crude Suppliers of TÜPRAŞ (Million Tons)

20

Crude Type 2017

0

10

20

30

40

50

60

70

80

90

2012 2013 2014 2015 2016 2017

797671

636765

71414

111517

101010131312

133 22

1066

Africa America Europe CIS Middle East

%36

%58,8

%5,3

>34 30> 30 - 40

In 2017, Tüpraş purchased 25 different types of crude oil from 14 countries, with gravities ranging between 18-47 API.

COMPANY OVERVIEW


Sales By Customer (2017)

21

Military%1Bitumen

%11

Export%18

Other%6

Petkim%1LPG

%4 Jet%5 THY Opet

%9

Dist.%45

OTHER%13

LUKOIL%4

TP%3

BP%15

SHELL%15

OPET%25

POAŞ%26

Customer Groups Sales to Distributors

Total : 31.5 mn ton Distributors : 14.3 mn ton

COMPANY OVERVIEW


Competitive Advantages of Tüpraş

22

High Complexity of Tüpraş

Best Fit for the Market with high diesel yield

Presence in all over Turkey through

refineries and terminals

Short on Diesel

High Economic Growth

Import Parity Pricing (Freight advantage of

Tüpraş)

Crude Oil & Feedstock Cost Advantage

Energy Efficient

Economies of Scale

Added Value Created by Tüpraş

Local Market Dynamics

Cost Base of Tüpraş

COMPANY OVERVIEW


OPET

23

Market share as of February 2018

White Product: 18.03% Black Product: 15.31%

Opet expanded its retail footprint from 1.560 stations in December 2017 to 1.581 stations in February 2018.

0

400

800

1200

1600

2010 2011 2012 2013 2014 2015 2016 2017 1Q 2018

441434431

435427418410394394

1.1401.1261.0731.009966938915885830

Opet Sunpet

1.2241.279 1.325 1.356 1.393

1.4441.504

1.560 1.581

COMPANY OVERVIEW


DİTAŞ, Marine Transport -Tüpraş Share 79.98%

24

• One of the biggest Turkish marine transportation companies of crude oil and petroleum products

• Carries mainly Tüpraş’ crude oil purchases and makes the transfer operations of product and semi-products

0

5

10

15

20

25

30

2011 2012 2013 2014 2015 2016 2017

6

65

43

3

3

17

97

56

15

19

Crude Oil Product

11 tugboats 8 mooring boats 2 service boats

1 pilot boat

253,7 mn $ Net Sales

49,6 mn $ Op. Profit

3 Crude Oil Tanker :479.765 DWT 1 Crude Oil - Product Tanker : 51.532 DWT7 Product Tanker : 90.534 DWT

21,9

18

9,6 8,411,8

15,2

23,3

COMPANY OVERVIEW


Körfez Ulaştırma A.Ş.- Tüpraş Share 100%

25

Körfez Ulaştırma A.Ş.

•On June 16th, Freight Train Operator Certificate,•On September 20th, Safety Management

Certificate received•Operates with 491 cistern wagons and 5 diesel• locomotives

2,5 mn tons/year transport

% 10 Market share

Turkey's First Private Railway Operator

2018 Target

COMPANY OVERVIEW

OPERATIONS


Capacity Utilization* (%)

Lower Capacity Utilization and Quarterly Production Volume

27

*Nameplate capacity calculated by standard 330 days of operations.

Quarterly Production (Million Tons)

0

30

60

90

120

Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018

67,3

99,994,5

80,7

65,1

Crude Oil Other

4

5

6

7

8

9

Q1 Q2 Q3 Q4

5,2

7,1

7,8 7,7

6,36,6 6,7

7,27,4

5,6

6,97,3 7,4

4,5 4,6

5,4 5,5

2014 2015 2016 2017 2018

• Capacity utilization and production decline in Q1 2018 was due to maintenances in İzmir, Kırıkkale and Batman refineries.• Our year-end guidances for capacity utilization and production have not been revised.

68,0

84,1

99,7106,4

78,0

OPERATIONS


Q1 Product Yields

28

White Products %78

Production 7.0 mn tons

API 31.08

White Products %79

Production 5.2 mn tons

API 31.33

2017Bitumen

%5

Fuel Oil%12

Coke%3

Other%2

ULSD%36

Jet%16

Naphtha%1

Gasoline%21

LPG%4

Black Prod.%20,9

Mid. Distil.%51,7

Light Distil.%25,7

Other%1,6

Bitumen%10

Fuel Oil%7

Coke%4

Other%0

ULSD%34

Jet%19

Naphtha%0

Gasoline%22

LPG%4

Black Prod.%20,4

Mid. Distil.%53,7

Light Distil.%25,9

2018

OPERATIONS


Increase in Domestic Sales (Million Tons)

29

Total Sales in Q1 Domestic Sales of Key Products in Q1

We generated 6.2 million tons of total sales in Q1 2018. Domestic diesel sales were 2.5 million tons, 8.6% higher than Q1 2017.

7,2

0

2

4

6

8

1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018

1,02,31,8

1,71,1

5,25,05,1

3,93,6

Domestic Sales Export

4,75,6

6,96,2

0

1

2

3

4

5

1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018

0,3

0,30,4

0,30,2

0,50,4

0,5

0,40,4

1,00,81,0

0,90,8

2,52,32,31,71,5

Diesel Jet Fuel Gasoline Bitumen

2,93,3

4,13,9

4,4

OPERATIONS


Investments (Million $)

30

• New Power Plant

• Revamp of Crude Unit

• FCC Modernization

• New Sulphur Units

• Energy Saving Projects

• Optimization of conversion units

• 9.5 Nelson complexity• High white product yield• Process more heavier and sour crudes• Run all refineries with 100% capacity utilization

Ongoing Projects

Avg. 247 mn$

Avg. 943 mn$

Avg. 278 mn$

274355 400

186 177

628

974

1.213

959

344213

185 63

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018

OPERATIONS


Capex (mn $) Margins ($/bbl)

2018 Expectations vs Q1 2018 Results

31

Brent Price ($/bbl)

0

20

40

60

80

100

120

140

15'Q1 16'Q1 17'Q1 18'Q1

78106,499,7

84,1

Capacity Utiliation (%)

• Full Capacity Utilization target for Full Year 2018

• 78% Capacity Utilization in Q1

• Revised Average Brent Price Expectation for Full Year 2018 from 55-60 $/bbl to 65-70 $/bbl

• 66.8 $/bbl Brent Price average in Q1 2018

0

2

4

6

8

10

Q1 2018

4,04,8

Tüpraş Net Margin Med Margin

• 7.5-8 $/bbl Expected Net Refining Margin for Full Year 2018

• 4.8 $/bbl Net Refining Margin in Q1 2018

0

80

160

240

320

400

2016 2017 Q1 2018

63,0

185,0213,0 • 250 mn $ CAPEX for

Full Year 2018 • 63 mn $ CAPEX in Q1

50

60

70

80

J-18 F-18 M-18

65,965,269,2

OPERATIONS

KEY FINANCIALS


-2

0

2

4

6

8

10

J-08 J-08 J-09 J-09 J-10 J-10 J-11 J-11 J-12 J-12 J-13 J-13 J-14 J-14 J-15 J-15 J-16 J-16 J-17 J-17 O 18

MonthAnnual

Margin Environment ($/bbl)

33

Tüpraş’ 4.8 $/bbl Net Refining Margin in Q1 2018 was higher than 4 $/bbl Med Complex margin.

Premium to the benchmark Mediterranean peers’ refining margin due to:

• Refined products deficit characteristic to the Turkish market

• Access to cheaper sources of crude oil • Ability to use heavier and sour crudes • Proximity to major suppliers • Reduces transport costs • Implemented cost reduction measures • Energy efficiency programs • Capacity to produce higher value added range of

refined products • Direct pipeline connections with domestic clients • High export capability

Med Complex

4,10 5,30

3,97 4,83

1,67 1,95

4,21

1,17

2,89 1,95

5,54

0

2

4

6

8

10

12

14

2013 2014 2015 2016 2017 Q1 2018

4,05,3

4,04,8

2,01,7

4,8

8,1

6,06,5

3,22,5

11,612,9

11,211,9

10,69,6

Tüpraş Gross Margin Tüpraş Net Margin Mediterranean

OPERATIONS


Net Debt- Net Debt/ *Rolling EBITDA

EBITDA

Financial Highlights (Million $)

34

0

500

1.000

1.500

2.000

2.500

3.000

2012

-R

2013

2014

H1

2014

9M

2014

2015

H1

2015

9M

2015

2016

H1

2019

9M

2016

2017

Q1

2017

H1

2017

9M

2017

2018

2.3311.6571.2401.6801.5551.7291.7512.3912.3702.7482.5771.6631.5981.8691.340551

Net Debt

0

1

2

3

4

5

6

0,8

2,4

3,5 3,6

4,9

3,32,8

1,7 2,01,6 1,5

1,1 1,0 0,71,1

1,6

Net Debt/*R. EBITDA

Tüpraş generated 271 mn USD in EBITDA in Q1 2018.

Net Income*

Return of Average Equity (%)

0

0

0

0

0

1

2011

2012

2013

2014

2015

2016

Q1

2016

H1

2016

9M

2016

2017

Q1

2017

H1

2017

9M

2017

2018

0,17

0,41

0,490,55

0,45

0,220,16

0,110,04

0,35

0,260,24

0,320,3

0,17

-50

200

450

700

950

1200

2012 2013 2014 2015 2016 2017 2018

123

256

285

9147271

283

197

268175435309 405

113273

171

7575

992352711223172161

1.046

594

938

667629817

-50

242

533

825

1117

1408

1700

2012 2013 2014 2015 2016 2017 2018

321

480

422

-11

89106

435

294

410

226315361

431

237415

-27

78153 271427

11415015079951st Q2nd Q3rd Q4th Q715

560338

1.397

1.125

1.614

Net Debt/Rolling EBITDA was calculated with USD figures

*Excluding minority interest

KEY FINANCIALS


Balance Sheet Analysis (Billion $)

35

0,0

0,6

1,2

1,8

2,4

3,0

Mar

.14

Jun.

14

Sep.

14

Dec

.14

Mar

.15

Jun.

15

Sep.

15

Dec

.15

Mar

.16

Jun.

16

Sep.

16

Dec

.16

Mar

.17

Jun.

17

Sep.

17

Dec

.17

Mar

.18

1,7

2,32,2

1,6

2,01,7

2,5

1,61,6

1,00,8

1,01,2

1,71,61,3

1,7

0,4

0,8

1,2

1,6

2,0

Mar

.14

Jun.

14

Sep.

14

Dec

.14

Mar

.15

Jun.

15

Sep.

15

Dec

.15

Mar

.16

Jun.

16

Sep.

16

Dec

.16

Mar

.17

Jun.

17

Sep.

17

Dec

.17

Mar

.18

1,421,361,57

1,151,090,91

0,750,91

0,700,88

1,07

0,66

0,200,09

0,510,520,71

0

1

2

3

4

Mar

.14

Jun.

14

Sep.

14

Dec

.14

Mar

.15

Jun.

15

Sep.

15

Dec

.15

Mar

-16

Jun-

16

Sep-

16

Dec

.16

Mar

.17

Jun.

17

Sep.

17

Dec

.17

Mar

.18

2,192,18

2,68

2,172,181,991,961,67

1,211,331,581,691,72

2,42

3,033,26

2,91

0,00,71,42,12,93,64,35,0

Mar

.14

2014

1h

2014

9M

Dec

14

Mar

.15

Jun.

15

Sep.

15

Dec

.15

Mar

-16

Jun-

16

Sep-

16

Dec

.16

Mar

.17

Jun.

17

Sep.

17

Dec

.17

Mar

.18

1,61,41,31,1

0,60,61,11,21,00,60,60,50,4

0,30,30,30,9

2,42,62,12,13,02,93,12,82,92,83,03,13,33,02,92,92,8

LT Loans ST Loans

Given our strong liquidity management and cash generation capabilities, our cash position funded the highest dividend payout in our history.

Cash & Cash Equivalents Trade Receivables

Trade PayablesFinancial Loans

1,70

3,73,2 3,2 3,3

3,73,6 3,6 3,4

3,9 4,04,2

3,4 3,6 3,2 3,4

1,42

4,0 4,0

2,19

KEY FINANCIALS


Q1 Profit Before Tax Bridge (2017-2018)

36

Decline in Profit Before Tax was driven by narrowing of crude oil differentials and impact of maintenances.

Million TL

2017 Crude Oil Differentials

Inventory Effect

Crack Margin Effect

Other 2018Maintenance Effect

471,8

1051,7

303,4

199,1

58,628,7

9,8

KEY FINANCIALS


Dividend (TL)

37

0

1000

2000

3000

4000

0

2

4

6

8

10

12

14

16

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Earings per Share Gross Dividend Total Payout

13,6

6,26,5

01,58

3,853,932,98

2,52,31

15,22

7,16

10,18

0

4,785,83

4,96

2,943,24

1,73

One of the highest dividend yield in BIST

2012/2013 EPS includes the tax incentive

KEY FINANCIALS


Tüpraş Balance Sheet

38

Million USD 31.12.2017 31.03.2018 Difference %Current Assets 5.399 5.144 -256 -5

Cash & C. Equivalents 2.334 1.701 -633 -27Receivables 1.355 1.416 61 4Derivatives 92 117 25 27Inventories 1.403 1.701 298 21

Pre-paid expenses 17 11 -5 -31Other Current Assets 199 198 -2 -1

Long Term Assets 4.718 4.526 -192 -4Financial Assets & Subsidiaries 303 272 -31 -10

Fixed Assets 3.263 3.112 -151 -5Derivatives 27 33 6 24

Pre-paid expenses 26 51 25 95Deferred Tax 813 765 -49 -6

Other Long Term Assets 286 293 7 3

Total Assets 10.118 9.670 -448 -4Short Term Liabilities 4.686 5.335 649 14

Financial Loans 1.398 1.615 217 16Payables 2.219 2.643 424 19

Derivatives 47 36 -11 -23Deferred Incomes 5 1 -4 -83

Provisions 24 32 8 34Other ST Liabilities 993 1.008 16 2

Long Term Liabilities 2.654 2.475 -179 -7Financial Loans 2.592 2.417 -175 -7

Payables & Provisions 59 56 -4 -6Derivatives 1 1 0 43

Other LT Liabilities 1 1 0 -8Equity 2.750 1.832 -919 -33

Minority Interests 28 28 0 0

Total Liabilities 10.118 9.670 -448 -4

KEY FINANCIALS


Creating Competitive & Sustainable Shareholder Value

39

%38

%62

BuyHold

Foreign Currency Long Term

Tüpraş BBB-(Stable) Ba1 (Stable)

Türkiye BB+ (Stable) Ba2 (Stable) BB- (Stable)

Koç Holding Ba1 (Stable) BBB- (Negative)

Analyst Recommendations

Board

Stakeholders

Transparency

Shareholders

Overall

0 25 50 75 100

94,7

95,5

94,0

98,6

92,9

Tüpraş has one of the highest Corporate Governance Ratings

KEY FINANCIALS


Financial Policy

40

Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counter party risk, interest rate, commodity and currency exposure

Thresholdand limits

• Net financial debt/EBITDA • Net foreign currency position/shareholders' equity • Inventory and crack margin exposure • Current ratio • The fixed/floating profile of financial debt • Liquidity: share of long term debt • Counter party risk limits

Counter partyRisk Policy

Deposit is kept, within certain limits, by banks that comply with the criteria determined in our policy

• Credit rating and strong capital base • Cap on the maximum deposit allocated to a single bank • Threshold for deposits subject to banks shareholders’ equity

KEY FINANCIALS


Inventory & Crack Margin Hedge

41

Operational Hedge: • Maintaining minimum amount of stock required for the refining activities • Forward Pricing: Purchasing crude oil through forward-priced contracts Financial Hedge: Proxy Hedging (both crude oil and refined product inventories) • Expected inventory exposure for the year end is hedged • Derivative transactions: Asian swap, Zero Cost Collar • Hedging ratio increasing throughout the year

• Crack margins: Gasoline, Diesel and Jet Fuel Cracks • Derivative transactions: Asian Swaps • Hedging Parameters: Budget figures, historical average prices of the cracks + standard deviations, market expectations • Maximum hedge ratio: 50%, • Tenor: up to next 4 quarters

InventoryHedgingPolicy

MarginHedgingPolicy

KEY FINANCIALS


FX Exposure Management (31 March 2018)

42

* Cash flow hedge accounting : 1 1,194 mn $

Consolidated Assets

Consolidated Liabilities

Cash1,393

Receivables & other assets

43

Stock1,647

Forward & CFH2,534

Payables1,806

ST Financial 1,254

• RUP : 311• Eurobond : 700

LT Financial 2,417

• RUP : 949• Eurobond 700• Other Loans : 768

+140 mn $

Million $

Active management of FX exposure kept the risk level within our limits.

• A significant portion of the Group's crude oil and refined product purchases are denominated in US Dollars. In addition, the Group finances its capital expenditures mostly through borrowings denominated in US Dollars.

• Natural Hedge: The Group is able to mitigate some of the impact of volatility in exchange rates through natural hedges: crude oil and refined product inventories are US Dollar denominated assets.

• Cash flow Hedge: RUP Facility financing loans designated as hedging instruments of highly probable export revenues.

• As a general Koç Holding financial policy, Group companies are allowed to keep foreign exchange positions within certain limits.

KEY FINANCIALS

OUTLOOK


2018 Refinery Maintenance Schedule & Capacity Utilization

44

Our year-end total capacity utilization target has not changed. We expect full year-end total capacity utilization.

Unit Quarter Duration (weeks) Reason

İzmir

*Plt 7000 Crude Oil Unit Q4 ’17 - Q2’ 18 17 in 2018 Revamp

*Hydrocracker, DHP & Platformer Q1 5-6Periodic Maintenance

Plt 4000 FCC Q2 5-6

İzmit

Plt 2 Crude Oil & Vacuum Unit Q4 5-6

Periodic Maintenance



Plt 47 Hydrocracker Complex Q2 4-5

Plt 63 CCR & DHP Q4 5-6

Kırıkkale *All Units Q1- Q2 9 Battery Shutdown

Batman *Plt. 100/Crude Oil & Vacuum Q1 4-5 Periodic Maintenance

2018 Crude Capacity Utilization 95,4 %2018 Total Capacity Utilization Full

* Completed Maintenances

OUTLOOK


Future Expectations

45

The average Brent price in 2018 is expected to be 65 - 70 $/dollars per barrel

We expect Med Complex margins to be between 4,75 - 5,00 dollars per barrel band in 2018

Net Tüpraş refinery margin is expected to be in the region of 7,50 - 8,00 dollars per barrel

• Full Total Capacity Utilization using imported semi-products such as ASRFO and HVGO • Production: approximately 28.3 million tons • Total sales: 31.0 million tons

Refining investments is expected to be around 250 Million dollars.

Brent Price Estimation

Med Complex Margin

Tüpraş Net Margin

Operations

Investment

We only updated our average Brent Price expectation. The rest of our expectations remains the same as before.

OUTLOOK


Competition # 1 (SOCAR-STAR Refinery)

46

• Goldman Sachs has acquired a 13 percent stake in SOCAR Turkey for $1.3 billion. • Goldman Sachs has the right to resell 10 percent of its stakes to Socar, and the remaining 3

percent to ‘Sermaye Investments Limited’ owned by SOCAR within 6 year at the same price.

STAR Refinery (Total Cap. 10 mn ton)

2019 mn ton

Production Turkish Demand Balance

Tüpraş Star Total

LPG 1,1 0,3 1,4 4,1 -2,7

Petchem Feeds 0,2 2,6 2,8

Gasoline 6,1 6,1 2,4 3,7

Jet Fuel 5,2 1,6 6,8 5,2 1,6

Diesel 10,7 4,5 15,2 26,5 -11,3

Coke 0,8 0,7 1,5 4,6 -3,1

Fuel Oil 1,8 1,8 1,3 0,5

Bitumen 3,1 3,1 3,1

Star Refinery Production Numbers (K Ton)Diesel 4.800Jet Fuel 1.600Sulphur 158Petrocoke 698

LPG 260Naptha 1.600Mixed xylene 460Reformate 524

Fuels

Petrochemical Feedstock

• 3,3 billion dollar credit agreement. First 4 year grace period total 15-18 year term.

• Project finance is supplied to company (US$ 1.5 billion)

• It is planned to be commissioned in 2018.

Credit : 3.3 Billion $

Equity : 2.4 Billion $

Total Investment : 5.7 Billion $

OUTLOOK


Competition # 2 (Regional Competition)

47

Ukraine

Russia

Georgia

Turkey

Bulgaria

Romania

Moldova

EgyptLibya

Tunisia

AlgeriaMorocco

PortugalSpain

France

Italy

IsraelSyria

TurkeyGreece

Albania

Croatia

• Tüpraş is competing with 71 refineries in the Mediterranean and Black Sea markets. • Mediterranean regional product balance is also affected from Middle East, North West Europe and Asia.

Mediterranean Black Sea

54 Refineries 7.8mn bpd

17 Refineries 1.8mn bpd

OUTLOOK


Marine Bunker Specification Changes and Its Effects

48

IMO, at the meeting held in October 2016, lowered the sulphur emission cap from marine bunkers from 3.5% to 0.5% (5000ppm): effective from 1 January 2020.

HS Fuel Oil

Diesel

LS FO

HS FOScrubbed

1,8LS Fuel Gap

2,1LS Fuel Gap

Mn

b/d

• Use of lower sulphur blend stocks like ULSD (Diesel)• Low Sulfur Fuel Oil production with light crudes• Sulphur Fuel Reduction Systems (Scrubber)• LNG

Requirements of spec change can be achieved through; • 80% of global trade is done via marine transportation.

• 50.000 vessels are in operation.

Bunker fuels account for;• ~5% of global oil demand• 40% of oil related sulphur emissions.

2016

%74Buy Low Sulphur Fuel

%19 Install Scrubber

switch %5 to LNG

%2 Other

Ship Owners Intention Survey2020 2022

OUTLOOK

Appendix


12M Product Yields

50

White Product %76.56

Production 27,93 mn tons

API 30,62

White Product %76.27

Production 28,88 mn tons

API 30,26

2016

Bitumen%12

Fuel Oil%7

Coke%3

Other%2

ULSD%33

Jet%17

Naphtha%1

Gasoline%20

LPG%4

Black Prod.%22,3

Mid. Distil.%50,4

Light Distil.%25,5

Other%1,7

Bitumen%12

Fuel Oil%7

Coke%3

Other%2

ULSD%33

Jet%17

Naphtha%1

Gasoline%20

LPG%4

Black Prod.%22,6

Mid. Distil.%50,3

Light Distil.%25,0

Other%2,1

2017

APPENDIX


Crack Margin Effect on Tüpraş in Q1 (FOB Italy Prices)

51

Product Price, $/ton Tüpraş Crack Margin, $/bbl2018 2017 2018 Yield 2018 2017

LPG 485,0 455,8 3,89 -23,6 -13,2Gasoline 630,5 544,2 20,31 10,9 13,3Naphtha 552,3 466,6 0,17 -4,4 -1,1Jet Fuel 629,6 497,5 18,27 13,3 9,5Diesel 588,5 478,4 31,00 12,3 10,5Diesel 1000 577,3 470,8 1,22 10,8 9,5Fuel Oil 1% 366,0 314,5 1,73 -10,3 -5,3Fuel Oil 3.5% 351,1 289,9 5,51 -12,6 -9,1Others 322,9 269,5 12,46 -12,8 -8,8

94,6Total Crack Margin,$/bbl 5,2 5,6Margin Difference, $/bbl -0,4Total Processed, mn bbl 39,0Total Effect, mn $ -15,4Total Effect, mn TL -58,6

Weighted average of total crack margin difference in Q1 2018 over Q1 2017 indicates a -0,4 $/bbl, yielding 58.6 million TL.

APPENDIX


Diesel 2.883

Gasoline LPG 522 69

PetroCoke 690

Sulphur 86

High Complexity (Resid Upgrading Units Production-(Thousand Tons)

52

Doğal Gaz 246

Vakum Resid1,214

Atm. Dip3,036

Total Feed 4,496

Total Production

4,250

Raw Materials Products

APPENDIX


Flexibility & Reliability; Multiple routes to maksimum capacity

53

• Increased conversion capacity

• Strong integration among refineries

CRUDE OIL 970008

VACUUM 423208

NAPHTHA SPLITTER 8

LPG MEROX 6

ISOMERISATION

UNIFINER REFORMER

LPG

GASOLINE NAPHTHA

JET FUELOİL

DIESEL

LUBE OIL

22.0%

33.9%

0.5%

19.9%

Capacity (m3/d)

KERO/DIES EL(HDS) 3730010

3.5%

FCC 2 4700

4 18200

3 6400

7 16900

COKER 82001

LPG MEROX

Yields (%)

16.5%

BITUMEN & FUEL OİL

OTHER 3.8%

More than one distillation and production units

VACUMMDİST.

NAFTASPLITTER UNIFINER

REFORMER

KERO / DIESEL

HDS

HYDROC.

FCC

COKER

ISOMER.

Benzen Saturation

FCCBenzin HDS

Lube Oil

Bitumen

CRUDE OIL

Flow Diagram

HYDROCRACKER

Number of unitsKey units

APPENDIX


Competition (European Pump Price Comparison)

54

Not: Prices valid on 21 May 2018-Turkey pirice as of May 22th 2018

Gasoline (Krş / Lt)

0

250

500

750

1000

TR Spa. UK Ger Eu19 Fra. Gre. Ita.

547550508487477482

370

308

5558503951

268320261319263248

338266

Pump No Tax Distr. Marg. Tax

624

708770 790 806

827 870 870

Diesel 10 (Krş / Lt)

0

100

200

300

400

500

600

700

800

900

TR Spa. Ger. EU19 Fra. Gre. UK Ita.

476487371

457394

363311

243

5045596150

279269377

267333

269347

272

566

658693

727783

748801 804

APPENDIX


Tüpraş HSE KPI: Loss Time Incident Frequency and Severity Frequency Ratios

55

0

2

4

6

8

2000 2001 2002 2003 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

0,9

2,01,3

0,81,4

2,61,8

3,23,6

3,13,42,8

2,41,71,91,71,9

3,53,4

5,04,8

6,16,97,17,1

Tüpraş Contractor

Loss Time Severity Frequency Rate 2008 2009 2010 2011 2012 2013 2014 2015 2016

Tüpraş 92 44 40 53 65 61 59 719 101

Contractor 116 101 81 118 424 17 378 51 551

Total 105 73 57 83 290 26 308 315 354

Incident Frequency Including contractors

3,6

2,5 1,7 2,21,5 1,1 1,6

2,51,9

Total

loss time incident freaquency rate =number of incident *1000000/man hours loss severity frequency rate = loss time*1000000/man hours

APPENDIX


Koç Holding

56

Turkey’s Leading Investment Holding CompanyTurkey’s largest industrial and services group in terms of revenues, exports, employees, taxes paid and market capitalization.

Leading positions with clear competitive advantages in sectors with long-term growth potential such as energy, automotive, consumer durables and finance.

Pioneer in its Sectors

• The only Turkish company in Fortuna 5001 • 16% CARG in consolidated profit2 the last five years

Notes : Data as of YE17, 2017 GDP reflects the projection of Turkish government’s Medium Term Program(1)2017 Report(2)In TL terms between

Turkey’s Leading Investment Holding Company Combined Revenues / GDP

Total Exports / Turkey’s Exports

Total MCap on Borsa İstanbul

7%

10%

19%

APPENDIX

Documents

Investor Presentation June - Microsoft · Investor Presentation High Complexity (Nelson Complexity of Reﬁnining Companies) 19 0 5 10 15 İ zmit Ref. o Reliance Essar Marathon Oil